This study examines the financing of private universities in both the US and Japan under demand shrinking. The data examination suggests that college going rate has increased past decade but will stop soon mainly due to the higher tuition charged and the lower employment rate of graduates. This makes most private institutions financially difficult since their revenue is heavily dependent on student tuition. In this situation, public subsidy is expected to increase while each college tries to recruit students by differentiating tuition among students and offering scholarship.